In accordance with Part Eight of the Capital Requirements Regulation (CRR) and the European Banking Authority (EBA) Guidelines on materiality, proprietary and confidentiality and on disclosure frequency, institutions shall publicly disclose relevant prudential information at least on an annual basis. In practice, top institutions usually disclose prudential data quarterly and a complete report annually. Annual disclosures shall be published in conjunction with the date of publication of the financial statements. Therefore, most institutions publish their Pillar 3 disclosures during the first quarter of the year.
Benchmarking of European institutions based on Pillar 3 disclosures
The purpose of the current analysis is to provide an updated overview of European banking system prudential situation and comparing of relevant capital, liquidity and credit risk ratios, leveraged on top institutions’ latest Pillar 3 annual disclosures.
Executive summary
The European Economic Area parent institutions shall comply with the prudential disclosures obligations on the basis of their consolidated situation. With the purpose to provide an overview of the evolution of main capital, liquidity and credit risk ratios of the European banking system, an analysis of the prudential disclosures obligations of 41 banks in the European Economic Area has been conducted. After this analysis, it is concluded that banks continue to maintain solid capital and liquidity ratios, and the NPL ratio and FBE ratio remained stabilised in average while the performing stage 2 ratios experienced significant increases.
Main content
The purpose of the current analysis is to provide an updated overview of European banking system prudential situation and comparing of relevant ratios, leveraged on top institutions’ latest Pillar 3 annual disclosures:
- Scope of the analysis: It has been analysed the data for December 2019 and December 2020 from 41 banks at the highest level of consolidation, from 8 banks banks in the European Economic Area.
- Conclusions on Global trends: Despite the COVID-19 shock, banks continue to maintain solid capital and liquidity ratios. Overall, the capital positions of the banks during 2020 have strengthened compared to 2019. The overall better performance of the ratios is largely driven by economic stimulus measures and economic stimulus and guarantee programmes provided by the competent authorities, as well as flexibility measures related to the calculation of capital requirements. The CET1 ratio has experienced a generalized growth in all banks whereas the LR ratio has increased slightly in average. The LCR also increased markedly and the NPL ratio and FBE ratio remained stable. The performing stage 2 ratios experienced significant increases.
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